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1 CLIENT MEMORANDUM From: West Corporation Re: New Federal Communication Commission Rule for Autodialed and Prerecorded Message Telemarketing Calls and Abandoned Call Provisions Date: February 17, 2012 Federal Communication Commission s Rule for Prerecorded Message Telemarketing Calls In 1991, Congress enacted the Telephone Consumer Protection Act (TCPA ). 1 The Federal Communication Commission ( FCC ) issued implementing regulations, the TCPA Rules, 2 shortly thereafter. On February 15, 2012, the FCC approved a Report and Order to finalize a 2010 Notice of Proposed Rulemaking to address autodialed and prerecorded message calls. The FCC indicated these amendments are to maximize consistency with the Federal Trade Commission s ( FTC ) Telemarketing Sales Rule ( TSR ). 3 The revisions to the TCPA Rules are discussed in detail below. Amendments to the TCPA Rules are noted in red. The changes include: (1) a requirement for prior express written consent for all autodialed or prerecorded telemarketing calls to emergency lines, health care facilities and cell phones; (2) a requirement for prior express written consent for prerecorded telemarketing calls to residential lines; (3) the elimination of the established business relationship exemption for prerecorded telemarketing calls to residential lines; (4) the inclusion of an interactive opt-out mechanism on prerecorded message calls and in the abandoned call message; (5) a revision to the abandoned call calculation to a per-campaign approach; and, (6) exemptions for health care messages and calls made by or on behalf of a tax-exempt nonprofit organization. The final TCPA Rules do not require prior written consent for autodialed calls to residential lines as described throughout the Report and Order and as noted in many news articles and law firm summaries. The FCC has adopted an implementation schedule for these amendments. The requirement for prior express written consent becomes effective twelve months after publication of the final rule in the Federal Register. The established business relationship exemption will be 1

2 phased out over that same twelve-month period. The interactive opt-out mechanism requirement for telemarketing calls will become effective ninety days after publication in the Federal Register. The revised abandoned call provisions will take effect thirty days after publication. 4 Below is a description of the amendments to the Rule. West Corporation s affiliates and their clients will each be affected differently. THE INFORMATION BELOW IS NOT INTENDED TO BE LEGAL ADVICE. YOU SHOULD CONSULT YOUR OWN LEGAL COUNSEL. Your legal counsel should feel free to contact our Corporate Legal Department to discuss the relevant issues. Definitions Advertisement Any material advertising the commercial availability or quality of any property, goods or services. 5 Automatic Telephone Dialing System and Autodialer Equipment which has the capacity to store or produce telephone numbers to be called using a random or sequential number generator and to dial such numbers. 6 Clear and Conspicuous Disclosure A notice that would be apparent to the reasonable consumer, separate and distinguishable from the advertising copy or other disclosures. 7 Prior Express Written Consent An agreement, in writing, bearing the signature of the person called that clearly authorizes the seller to deliver or cause to be delivered to the person called advertisements or telemarketing messages using an automatic telephone dialing system or an artificial or prerecorded voice, and the telephone number to which the signatory authorizes such advertisements or telemarketing messages to be delivered. (i) The written agreement shall include a clear and conspicuous disclosure informing the person signing that: (A) By executing the agreement, such person authorizes the seller to deliver or cause to be delivered to the signatory telemarketing calls using an automatic telephone dialing system or an artificial or prerecorded voice; and (B) The person is not required to sign the agreement (directly or indirectly), or agree to enter into such an agreement as a condition of purchasing any property, goods, or services. (ii) The term signature shall include an electronic or digital form of signature, to the extent that such form of signature is recognized as a valid signature under applicable federal law or state contract law. 8 Telemarketing The initiation of a telephone call or message for the purpose of encouraging the purchase or rental of, or investment in, property, goods or services, which is transmitted to any person. 9 2

3 Section (a)(1). No calls using automatic dialing equipment or prerecorded message calls to emergency telephone lines, health care facilities or cell phones unless the calls are for emergency purposes or made with the prior express consent of the called party. Rule: Section (a)(1) No person or entity may, except as provided in paragraph (a)(2), initiate any telephone call (other than a call made for emergency purposes or made with the prior express consent of the called party) using an automatic telephone dialing system or an artificial or prerecorded voice; (i) To any emergency telephone line, including any 911 line and any emergency line of a hospital, medical physician or service office, health care facility, poison control center, or fire protection or law enforcement agency; (ii) To the telephone line of any guest room or patient room of a hospital, health care facility, elderly home, or similar establishment; or (iii) To any telephone number assigned to a paging service, cellular telephone service, specialized mobile radio service, or other radio common carrier service, or any service for which the called party is charged for the call. (iv) A person will not be liable for violating the prohibition in paragraph (a)(1)(iii) of this section when the call is placed to a wireless number that has been ported from wireline service and such call is a voice call; not knowingly made to a wireless number; and made within 15 days of the porting of the number from wireline to wireless service, provided the number is not already on the national do-not-call registry or caller's company-specific do-not-call list. This section of the TCPA Rules changed only slightly to note the new paragraph (a)(2). The FCC stated in the Report and Order, None of our actions change requirements for prerecorded messages that are nontelemarketing, informational calls, such as calls by or on behalf of tax-exempt non-profit organizations, calls for political purposes, and calls for other noncommercial purposes, including those that deliver purely information messages such as school closings. Such calls continue to require some form of prior express consent under the TCPA and the Commission s rules, if placed to wireless numbers and other specified recipients. 10 This would include debt collection calls which the FCC has determined are not telemarketing calls. It would appear the FCC s 2007 Declaratory Ruling regarding debt collection calls remains in force. This Ruling stated the provision of a cell phone number to a creditor in connection with a debt as, for example, part of a credit application, evidences the required prior express consent of the debtor to be contacted at that number. 11 Section (a)(2). No advertisement or telemarketing calls using an automatic telephone dialing system or a prerecorded message to emergency telephone lines, health care facilities or cell phones unless there is prior written consent. An exception is set forth for nonprofit organizations and health care calls. 3

4 Rule: Section (a)(2) No person or entity may initiate, or cause to be initiated, any telephone call that includes or introduces an advertisement or constitutes telemarketing, using an automatic telephone dialing system or an artificial or prerecorded voice, to any of the lines or telephone numbers described in paragraphs (a)(1)(i)-(iii) of this section, other than a call made with the prior express written consent of the called party or the prior express consent of the called party when the call is made by or on behalf of a tax-exempt nonprofit organization, or a call that delivers a health care message made by, or on behalf of, a covered entity or its business associate, as those terms are defined in the HIPAA Privacy Rule, 45 CFR This section focuses on telemarketing calls, whether made with an autodialer or a prerecorded message, to emergency telephone lines, health care facilities and cell phones. These kinds of calls require prior express written consent as defined. The FCC indicated that because the costs of receiving autodialed or prerecorded telemarketing calls to wireless numbers often rests with the wireless subscriber, it is essential to require prior express written consent for these calls. 12 For health care calls and calls for nonprofit organizations to these telephone lines, only prior express consent is required. Section (a)(3). No prerecorded message telemarketing calls to residential lines without the prior express written consent of the called party. Rule: Section (a)(3) No person or entity may initiate any telephone call to any residential line using an artificial or prerecorded voice to deliver a message without the prior express written consent of the called party, unless the call; (i) Is made for emergency purposes; (ii) Is not made for a commercial purpose; (iii) Is made for a commercial purpose but does not include or introduce an unsolicited advertisement or constitute a telephone solicitation telemarketing; (iv) Is made to any person with whom the caller has an established business relationship at the time the call is made; or (viv) Is made by or on behalf of a tax-exempt nonprofit organization; or (v) Delivers a health care message made by, or on behalf of, a covered entity or its business associate, as those terms are defined in the HIPAA Privacy Rules, 45 CFR This section requires prior express written consent for prerecorded message telemarketing calls to landlines. It does not address calls made with an autodialer. Of note is the discrepancy in the Report and Order between the commentary about prior express written consent and the final TCPA Rules. The FCC throughout the commentary seems to indicate prior express written consent is required for all autodialed or prerecorded telemarketing calls to wireless numbers and residential lines. 13 The final TCPA Rules, however, contradict this commentary requiring prior express written consent for autodialed or prerecorded telemarketing 4

5 calls to wireless numbers in (a)(2) but requiring prior express written consent for only prerecorded telemarketing calls to residential lines in (a)(3). This section also eliminates the established business relationship ( EBR ) exemption that exists in the current rule for these types of calls. The FCC indicated complaints about EBRbased calls demonstrates consumers are not necessarily willing to receive prerecorded telemarketing calls based on an EBR. 14 It clarifies that non-telemarketing informational calls do not require written consent. These types of calls would continue to require prior express consent if made to cell phones as noted in (a)(2). The FCC did address dual-purpose callsthose that may have both informational and advertisement components. The FCC stated, If the call, notwithstanding its free offer or other information, is intended to offer property, goods or services for sale either during the call, or in the future, that call is an advertisement. 15 With respect to written consent, the FCC has indicated the term signed may include an electronic signature if it is recognized as valid under applicable federal or state contract law. 16 This would include permission obtained via an , website form, text message, telephone keypress, or voice recording. 17 A consumer s written consent must be sufficient to show that the consumer received clear and conspicuous disclosure that the consumer will receive future calls that deliver prerecorded messages by or on behalf of a specific seller and unambiguously agrees to receive such calls at the number the consumer designates. Should any question about the consent arise, the seller bears the burden of demonstrating the required disclosure was provided and unambiguous consent obtained. 18 Section (a)(7). The FCC amended the abandoned call rate limitation to mirror the FTC s requirement of 3% as measured over a 30-day period for a single calling campaign. Rule: Section (a)(7) No person or entity may abandon more than three percent of all telemarketing calls that are answered live by a person, as measured over a 30-day period for a single calling campaign. If a single calling campaign exceeds a 30-day period, the abandonment rate shall be calculated separately for each successive 30-day period or portion thereof that such calling campaign continues. A call is abandoned if it is not connected to a live sales representative within two (2) seconds of the called person's completed greeting. (i) Whenever a live sales representative is not available to speak with the person answering the call, within two (2) seconds after the called person's completed greeting, the telemarketer or the seller must provide: (A) A prerecorded identification and opt-out message that is limited to disclosing that the call was for telemarketing purposes and states the name of the business, entity, or individual on whose behalf the call was placed, and a telephone number for such business, entity, or individual that permits the called person to make a do-not-call request during regular business hours for the duration of the telemarketing campaign; provided, that, such telephone number may not be a 900 number or any other number for which charges exceed local or long distance transmission charges, and 5

6 (B) An automated, interactive voice- and/or key press-activated opt-out mechanism that enables the called person to make a do-not-call request prior to terminating the call, including brief explanatory instructions on how to use such mechanism. When the called person elects to opt-out using such mechanism, the mechanism must automatically record the called person s number to the seller s do-not-call list and immediately terminate the call. (ii) A call for telemarketing purposes that delivers an artificial or prerecorded voice message to a residential telephone line that is assigned to a person who either has granted prior express consent for the call to be made or has an established business relationship with the caller or to any of the lines or telephone numbers described in paragraphs (a)(1)(i)-(iii) of this section after the subscriber to such line has granted prior express written consent for the call to be made shall not be considered an abandoned call if the message begins within two (2) seconds of the called person's completed greeting. (iii) The seller or telemarketer must maintain records establishing compliance with paragraph (a)(7) of this section. (iv) Calls made by or on behalf of tax-exempt nonprofit organizations are not covered by paragraph (a)(67)of this section. The FCC revised the TCPA Rules in this section to match the FTC s abandoned call provisions. This amendment will prevent telemarketers from averaging abandoned calls across multiple campaigns. 19 In addition to this change, the FCC is requiring an automated, interactive voice- and/or keypress-activated opt-out mechanism to be included in all abandoned call messages. This mechanism is to enable consumers to assert a do-not-call request that must be automatically recorded on the seller s do-not-call list. Section (b). All prerecorded telemarketing messages must include an automated, interactive voice- and/or keypress-activated opt-out mechanism for the called person to assert a do-not-call request. Rule: Section (b) All artificial or prerecorded voice telephone messages shall: (1) At the beginning of the message, state clearly the identity of the business, individual, or other entity that is responsible for initiating the call. If a business is responsible for initiating the call, the name under which the entity is registered to conduct business with the State Corporation Commission (or comparable regulatory authority) must be stated; (2) During or after the message, state clearly the telephone number (other than that of the autodialer or prerecorded message player that placed the call) of such business, other entity, or individual. The telephone number provided may not be a 900 number or any other number for which charges exceed local or long distance transmission charges. For telemarketing messages to residential telephone subscribers, such telephone number must permit any individual to make a do-not-call request during regular business hours for the duration of the telemarketing campaign; and (3) In every case where the artificial or prerecorded voice telephone message includes or introduces an advertisement or constitutes telemarketing and is delivered to a residential telephone line or any of the lines or telephone numbers described in paragraphs (a)(1)(i)-(iii), 6

7 provide an automated, interactive voice- and/or key press-activated opt-out mechanism for the called person to make a do-not-call request, including brief explanatory instructions on how to use such mechanism, within two (2) seconds of providing the identification information required in paragraph (b)(1) of this section. When the called person elects to opt out using such mechanism, the mechanism, must automatically record the called person s number to the seller s do-not-call list and immediately terminate the call. When the artificial or prerecorded voice telephone message is left on an answering machine or a voice mail service, such message must also provide a toll free number that enables the called person to call back at a later time and connect directly to the automated, interactive voice- and/or key press-activated opt-out mechanism and automatically record the called person s number to the seller s do-not-call list. The FCC amended this section to require an automated, interactive opt-out mechanism for consumers to make a do-not-call request. This requirement is similar to that of the FTC. In its commentary, the FCC indicates the opt-out mechanism must be announced at the outset of the message and be available for the duration of the call. 20 This opt-out mechanism must be accessible in any prerecorded telemarketing call, whether it is answered by a live person, or an answering machine or voice mail service USC CFR CFR FCC Report and Order February 15, 2102 (hereinafter Report and Order ), CFR (f)(1) CFR (f)(2) CFR (f)(3) CFR (f)(8) CFR (f)(12). 10 Report and Order, Report and Order, 9 and footnote Report and Order, Report and Order, 2. See also 18, 20, Report and Order, Report and Order, Report and Order, Report and Order, Report and Order, Report and Order, Report and Order, 47. 7

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